Emotionally disciplined traders outperform the market. No strong positive or negative emotion dictates their trading actions. This puts them ahead of the vast majority of investors who lack emotional discipline.
Use these tips to hone your mental tools.
Study Prior Market Performance
Studying prior marketing performance clues you in to potential future trends and sharpens your mental game. Seeing how the masses of investors reacted during a previous mild shakeout can keep you in the market during a minor, natural correction. As a rule of thumb most traders are dominated by their emotions and have no strategy in place to deal with market-wide corrections or upturns. Observe how the market and investors behaved in the past to be mentally disciplined when most traders are gobbling up more stock during a rapid uptick or are heading for the hills during a minor downturn. Develop confidence in patterns to sit tight or to sell when the market behaves in a certain fashion.
Work on Your Mindset through Personal Development
Disciplined traders fill their minds with positive materials to develop mental toughness. Whether you meditate, speak affirmations or immerse yourself in inspirational eBooks working on your mindset can inspire you to zig when most of the market is zagging in a greedy, fearful or panic-stricken fashion. The majority of traders struggle to be patient at the right time. Fear and greed largely drive the market so if you can act from a detached space while traders are allowing their fears and greediness to get the better of them you’ll likely make a handsome profit.
Spend 30 minutes or more daily on developing your mindset. Take a disciplined approach to honing your mental tools to stay ahead of the investing herd.
Study the Investment Masters
Trading icon Jesse Livermore had a steely resolve while making a fortune playing the market. He harped on the fact that to make money trading you can’t let your emotions call the shots. It may feel natural to be fearful, greedy or hopeful at certain times but he stressed that you shouldn’t act on these emotions if you want to become a successful trader. Livermore and other highly successful investors teach you to take your strong positive and negative emotions out of the investment equation.
The most prospering traders know that powerful emotions cloud your judgment. If you want to mimic their success on some level commit to studying their approaches to developing mental discipline.
Use Tools to Remind Yourself to Keep Calm
Place a rubber band around your wrist. Snap it if you feel yourself become greedy or fearful or hopeful during a market high or low. Use simple tools to remind yourself to stay calm and focused during the inevitable ups and downs of any market. Nobody is immune from experiencing strong emotions but if you can catch yourself through some quick and easy strategy to note your emotional urges you can avoid acting on fearful or greedy feelings.
Use online reminders to stay balanced. Set up hourly alarms or find some other cyber strategy to keep cool, calm and collected during your trading day.
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